YWCA Playing Ball With Federal Tax Program

Thursday January 21, 2010

« Back To News

REAL ESTATE: Association leverages tax credit to pay for $70 million center.

By DANIEL MILLER
Los Angeles Business Journal Staff

The YWCA of Greater Los Angeles Inc. has turned to a unique financing tool to raise money for the construction of its $70 million center in downtown Los Angeles.

The project at 1020 S. Olive St. - which will have housing, a charter school and job training facilities for at-risk, homeless and emancipated youth as well as young adults - is being financed by the New Markets Tax Credit Program. The federal program was created in 2000 to encourage development in low-income areas by enticing investors with tax credits.

The $70 million was raised in part by selling $7.8 million in tax credits to JPMorgan Chase and additional ones to Bank of America's commercial bank subsidiary.

The project also received proceeds from the sale of tax credits by other organizations. The total proceeds were then leveraged by a loan.

"This opportunity has been extremely invaluable to this project. Not only does it provide the necessary funding but it has acquainted the financial industry with the needs of our at-risk youth," said Faye Washington, chief executive of the YWCA of Greater Los Angeles.

A portion of the credits were held by the Los Angeles Development Fund, a non-profit entity established in 2006 by the city of Los Angeles to apply for and administer the tax credits. The fund, administered by the Los Angeles Community Redevelopment Agency, received a $75 million tax credit allocation in 2007. The YWCA deal is the fund's first.

Jina Yoon, manager of capital finance for the CRA, said the credits were critical in creating the project's core financing.

"It helps create of pool of equity that, when levered up, results in $70 million in funding," said Yoon, who expects the fund to apply for more credits.

The CRA declined to release details about the transaction with JPMorgan Chase.

Site work began at the former parking lot last month. Once the 154,000-square-foot building is completed in November 2011, nearby YWCA offices will be consolidated there.

 

« Back To News

Photos

No Photos Available